Sunset
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Looking for advice on which action is better and am I missing something important money-wise in my choices:
This year I earned approximately $3,000 from self employment, to keep an old employer's system running.
In past when I'd earn over $10K , I'd deduct expenses and with leftover income contribute to my self-401K-Roth, plus my regular Roth.
Now with $3,000 earnings I'm wondering which is smarter:
(1) Deduct $2K expenses and pay FICA and income tax at 22% on $1K, then contribute 1K to self-401K-Roth, and 1K to regular Roth.
(2) Skip deducting expenses so pay FICA and income tax at 22% on $3K, then contribute 3K to self-401K-Roth, and 3K to regular Roth.
(3) Spend and extra $1K on expenses, so I deduct away the entire earnings, pay no tax on self-employment.
I will be doing IRA -> Roth conversions as well, so won't be doing any IRA contributions.
This year I earned approximately $3,000 from self employment, to keep an old employer's system running.
In past when I'd earn over $10K , I'd deduct expenses and with leftover income contribute to my self-401K-Roth, plus my regular Roth.
Now with $3,000 earnings I'm wondering which is smarter:
(1) Deduct $2K expenses and pay FICA and income tax at 22% on $1K, then contribute 1K to self-401K-Roth, and 1K to regular Roth.
(2) Skip deducting expenses so pay FICA and income tax at 22% on $3K, then contribute 3K to self-401K-Roth, and 3K to regular Roth.
(3) Spend and extra $1K on expenses, so I deduct away the entire earnings, pay no tax on self-employment.
I will be doing IRA -> Roth conversions as well, so won't be doing any IRA contributions.